Celfin Investors Day - Engie · E-CL Overview: Our Business (cont.) Recently renewed /renegotiated PPAs with pass-through provisions Contracted capacity of 1,171 MW increasing to

Celfin Investors DayCelfin Investors DayLondon / New YorkJune 2010

www.E-CL .CL

Table of contents

Part 1 E-CL Overview

Part 2 Ownership Structure

Part 3 Industry: “Sistema Interconectado del Norte Grande” – SING

Part 4 Operational Strategy

2

Part 6 Investment Program

Part 7 Financial Summary

E-CL Overview: Our Business

4th Largest

� Leading power generation company in the SING: gross capacity 1,795 MW and 49% of Market Share.

• Coal: 781 MW• Gas (Argentine and LNG): 688 MW• Diesel & Fuel Oil: 313 MW• Hydro: 13 MW

� Sister company of new LNG terminal in northern Chile (GNL Mejillones, commercial operation started in May 2010).

� Two coal fired plants in construction (combined 330 MW) which will bring

3

Largest electricity generator in Chile

� Two coal fired plants in construction (combined 330 MW) which will bring total installed capacity to 2,125 MW in 2011.

� Gas transportation and distribution through Gasoducto Norandino and Distrinor.

� 2,080 kms. of transmission lines.

� Main competitors:• AES Gener – Norgener (277 MW coal) & Salta (643 MW gas, with limited

dispatch to SING of 180 MW)• Gas Atacama (Endesa) only gas-diesel (781 MW)• Celta (Endesa) 158 MW coal

E-CL Overview: Our Business (cont.)

Recently renewed

/renegotiated PPAs with

pass-through provisions

� Contracted capacity of 1,171 MW increasing to 1,319 MW in 201 2.

� Average remaining PPA term of 11 years; (83% industry, mainl ymining companies, 17% regulated, distribution company EME Lstarting 2012).

� Pass-through of fuel costs (PPA energy price indexation based on mixof Coal, LNG, Fuel Oil N°6 and Diesel prices, CPI, and SING marginalenergy cost). Tariffs consider effects of maintenance, regulatory costs,and return on investment in new capacity.

4

E-CL Overview: Our Business (cont.)

Financial Highlights 2009

� Total Revenues

� EBITDA

� Net Income

� Total Assets

� CAPEX

� Net Debt/EBITDA

� Market Capitalization

MUSD 977

MUSD 341

MUSD 259

MUSD 2,352

MUSD 455

1.6 x

BUSD 2.0

5

� Market Capitalization BUSD 2.0

RevenueBreakdown 2009

97%

3%

Miners Industrials

100%Unregulated

96%

4%

Unregulated Spot market

100%Sales

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6



Ownership Structure: Company History

1913 - 2002 2002 - 2009 2010

ELECTROANDINA (EA)

� 1913: Power plant for Chuquicamata mine.

� 1995: Spin-off from Codelco & privatized:

• 2/3-owned by Codelco;• 1/3-owned by Tractebel (now

GDF-Suez) w/Mgmt. control per Shareholders’ agreement.

EA & ED

� 2002-2009: Integrated operation as sister companies.

� 2004: Argentinean gas supply crisis.

� 2004-2008: Rising fuel prices => high marginal cost.

� EA: Heavily contracted => Net buyer of energy & capacity.

E-CL

� DEC.29, 2009: Merger of GDF-Suez and Codelco’s power assets in the SING.

� New Ownership• GDF Suez – 52.4%;• Codelco – 40.0%;• Public – 7.6%.

� ED - Op.& Holdco , owning • 100% of EA;

7

buyer of energy & capacity.

� ED: Fewer contracts => Net seller of energy & capacity.

� 2007-2009: Renegotiation / renewal of PPAs to reflect fuel cost reality.

• 100% of EA;• 100% of CTA;• 60% of CTH;• 100% of GNAC & GNAA.

� APR.27, 2010: ED becomes E-CL.

EDELNOR (ED)

�Origin: State-owned integrated electricity Co.

� 1988-93: Genco.& Distco. split & privatized.

� 1993: Genco. Acquired by Southern Electric.

� 2001: Chapter 11.� 2002: Acquired by Suez/Codelco

– Debt Restructuring.

Ownership Structure – Post Merger

MinorityInvestors7,6%

8

GasoductoNor AndinoArgentina

100,00%

Ownership Structure: GDF SUEZ

� A major industrial player in the energy sector:

A leader in natural gas in EuropeWorld leader in LNGLeader in electricityWorld leader in services

� Diversified installed capacity: 72.7 GWNatural Gas-54%, Hydro-18%, Nuclear-8%

36%

20%

22%

7%

15%

3%Energy France

Energy Europe & International

Global Gas & LNG

Infrastructures

Energy Services

SUEZ EnvironnementEBITDA

BEUR 14

9

Natural Gas-54%, Hydro-18%, Nuclear-8%Coal-10%, Wind-3%, Bio-1%, Others-6%.

� Latam: 10.7 GW + 5 GW in construction;BUSD 1.6 EBITDA; 11% of Global EBITDA.

� 200,000 employees worldwide.� 17th company in Forbes’ Global 2000 list.

• Assets: BEUR 171

• EBITDA: BEUR 14

• CAPEX: BEUR 11.2

� Ratings: S&P A/A1, Moody’s Aa3/P1

38%

14%

33%

3%6%

5%

France

Belgium

Other Europe

Rest of the world

North America

South AmericaRevenuesBEUR 80

Ownership Structure: Codelco

� World largest integrated copper mining company and second largest producer of molybdenum.

� State-owned company, producing 1.8 million tons of fine copper.

� Accounts for about 12% of global copper production.

10

� Financial highlights (FYE 2009):• Assets: BUSD 16.0

• Revenues: BUSD 12.1

• EBITDA: BUSD 5.5

• CAPEX: BUSD 1.6

� Rating: S&P A+

Ownership Structure:Other GDF Suez & Codelco Projects in the North of Chile

GNL re-gasification plant, North of Chile

� 50%-owned by GDF Suez; 50% by Codelco.� Start-up: April 2010.� Commercial operation started: May 2010.� Total capacity: 5.5 million m3/day.� Capacity for electricity generation: 1,100 MW.� Total investment: MUSD 500.

11

� Total investment: MUSD 500.

�Diversified LNG sources: Trinidad-Tobago, Yemen, Nigeria.

�Access to GDF-Suez global LNG network.

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12



Industry: Main Power Grids in Chile

SING SIC

% of Country Population 6.3% 92.2%

Generation GWh (2009) 14,907 41,783

Peak Demand MW (2009) 1,900 6,145

Load Factor 87% 77%

Economic Sectors Mining All

Installed Capacity MW (2009) 3,684 11,352

SING3,6 GW

Installed Capacity

SIC11,3 GW

Installed Capacity

13

Installed Capacity MW (2009) 3,684 11,352

SING: Sistema Interconectado del Norte Grande

SIC: Sistema Interconectado Central

Others0,15 GW

Installed Capacity

Industry: Chile’s Electricity Market Structure

� Generation, transmission and distribution of electricity are developed by private companies.

� The state exercises regulatory functions through the National Energy Commission (CNE) and performs indicative planning of investments in generation and transmission.

� The CDECs (Centro de Despacho Económico de Carga), are private entities formed by representatives of generation and transmission companies and coordinate the power generation dispatch in their respective interconnected electricity system.

� The power grids are intended to be near perfect markets for the sale of electricity in which the lowest marginal cost producer is used to satisfy demand before the next lowest marginal cost producer is dispatched.

14

lowest marginal cost producer is dispatched.

Spot:

� Short-term energy marginal cost.

� Capacity node price: equivalent to 25 years investment repayment on a gas turbine.

Generator - Regulated Customer (Distco.)

Industry: Pricing in Chile’s Electricity Market

15

Customer (Distco.)

� Energy price bid subject to indexation formula proposed by bidders.

� Capacity node price.

Generator - Non regulated Customer (free)

� Bilateral negotiation.

SING

Industry:Sistema Interconectado del Norte Grande - SING

�The SING covers Chile’s northern regions I and II: Atacama desert.�No water resources: 99.4% of electricity generated from thermal sources.�Few, spread-out populated areas: 6.3% of Chile’s population.�Only 3 GenCos account for 100% of production (E-CL, AES Gener, Endesa).� 90% of energy sold to mining and industrial clients per freely negotiated contracts.� 10% of energy sold to regulated customers (distributors), currently at Node price but

starting 2012 at LT contracted price.�The SING recent history:

• 1999-2004: Overcapacity and low energy prices due to arrival of natural gas from Argentina and construction of 2,100 MW of new gas capacity.

16SIC - EMR

90%

10%

Miners/Industrials Unregulated

100% Demand

• 2004-2009: Lack of gas supply from Argentina + rising coal and oil prices => higher generation costs.

• 2010: Implementation of ST LNG solution; new coal plants under construction.

Industry: Supply in the SING: Generation Capacity

In 2009, generation was 57% coal, 20% gas and 23% diesel/fuel oil.

SING Installed Capacity

2009

Market Share (Demand)

2009

32,9%

57,3%

9,4%0,3%

Hydro Coal

3.6 GW

33%

E-CL

AES GENER

ENDESA

17

Installed Capacity by GenCO

2009

Hydro CoalCombined Cycle FO 6 & Diesel

15%

52%13.7 TWh

25%

26%

49%

E-CL

AES GENER

ENDESA

3.6 GW

2200

2600

3000

Ave

rage

Dem

and

Internal

CNE/1009

CNE/0410

Industry:Historic and Forecasted Demand in the SING

MW

Collahuasi phase I: 60 MW 2011

Esperanza: 150 MW 2011

Ministro Hales: 80 MW 2013

Quadra: 55 MW 2013

Quebrada Blanca: 150 MW 2014

Quadra: 200 MW 2014

18

1000

1400

1800

2005 2007 2009 2011 2013 2015

Ave

rage

Dem

and

Collahuasi phase II: 140 MW 2015

Escondida phase V: 220 MW 2015

Quebrada Blanca: 250 MW 2015

Source: April ’10 Node Price Report of Chilean National Energy Commission (CNE) and Internal.

A low-risk portfolio of big mining clients, with re lative low production costs compared to mining companies in the rest of the world:

•Mainly copper mining clients, benefiting from increasing world demand.•Long-term contracts (PPAs) with pass-through of fuel prices.

230

280

330

Pric

e in

US

$/M

Wh

230

280

330Average Free Price: US$/MWh

Average Market Price: US$/MWh

Marginal Cost SING: US$/MWh

Industry:Evolution of electricity prices in the SING (Oct ’05-Feb ’10)

� Energy Market and Spot Prices in the SING

Market Price:118 US$/MWh

19

30

80

130

180

Oct0

5 D

ic05

Feb

06 A

br06

Jun06

Ago0

6 O

ct06

Dic0

6 F

eb07

Abr0

7 Ju

n07

Ago

07 O

ct07

Dic07

Feb

08 A

br08

Jun0

8 A

go0 8

Oct0

8 D

ic08

Feb

09Abr

09Ju

n 09Ago0

9 O

ct09

Dic0

9 F

eb10

Abr1

0

Pric

e in

US

$/M

Wh

30

80

130

180

Source: April ’10 Node Price Report of Chilean National Energy Commission (CNE).

Industry: Future Challenges in the SING

3000

4000

5000

6000

Pro

ject

ed C

apac

ity

+350 MW+140 MW +90 MW

MW

+50 MW

+400 MW

+848 MW

Under Study: 630 MW63% Coal

37% ERNC

Under study by E-CL (COD-2014)350 MW coal50 MW Wind

20

0

1000

2000

3000

Pro

ject

ed C

apac

ity

Construction (COD 2011)330 MW coal : CTA&CTH (E-CL)

518 MW coal : Angamos I & II (AES Gener)

CurrentCapacity

Conservative commercial policy•Growth CAPEX to be developed only if PPAs are signed.•PPA capacity tariff covering return on investment and pass-through energy tariff.

E-CL has Environmental Impact Study approved•Two coal-fired plants, 375 MW each.

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21



Operational Strategy:Commercial Policy Drivers

Market Share• To maintain market share (approximately 50%) in a sustainable and profitable

manner; only new investments supported by contracts.

Energy Price Indexation• PPA energy price indexation is based on mix of the following: Prices of Coal,

LNG, Fuel Oil N°6 and Diesel, CPI, and SING marginal energy cost.• Overall PPA indexation is matched with generation capacity by type of fuel

(Pass-through).

1

2

22

Market Exposure• Credit risk considered in payment clauses.• Strong mining / industrial off-takers.• Diversification from copper risk provided by PPAs with non-metal mining and

residential clients through the distribution company contract starting on 2012.

Long-Term PPAs• PPA prices set to remunerate investment in new capacity.

3

4

Operational Strategy:E-CL’s Main Power Supply Contracts

100

200

300

400

500

Ave

rg. D

eman

d -

MW

Codelco

AMSA

BarrickFreeport-MMBHP

CGEresidential customer (DistCo’s)

23

� E-CL has supply contracts for an average of 1,171 MW through 2011, rising to 1,319 MW in2012, with average remaining tenor of 11 years.

� In 2009 the portfolio was 97% non-regulated customers (mainly miners) and 3% industrialcustomers.

� Beginning 2012, through the Distco’s contract, E-CL will cover 100% of residential consumption(230 MW). The contract breakdown will then be 83% non-regulated and 17% residential.

0

100

0,0 5,0 10,0 15,0 20,0

Averg. Contract - Years

Xstrata

SQM

Anglo AmericanOthers

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24



Investment Program:Projects under construction - COD in 2011

CENTRAL TERMOELÉCTRICA ANDINA

� 165 MW gross capacity coal fired power plant project in Mejillones(Region II) connected to the SING power grid.

� 21-yr. PPA with Codelco.

� Scheduled Start-up Date: first quarter 2011 (Overall ProjectProgress Rate as of April 2010: 92.8%).

� Total CAPEX: MUSD 496.

� Total project financing debt of up to MUSD 393 maturing 2025,with limited recourse to E-CL.

25

� Project leverage: 79.83% Debt / 20.17% Equity.

CENTRAL TERMOELÉCTRICA HORNITOS

� Twin 165 MW coal fired unit adjacent to CTA.

� 15-yr. PPA with Minera Esperanza.

� Scheduled Start-up Date: Second quarter 2011 (Overall ProjectProgress Rate as of April 2010: 87.2%).

� Total CAPEX: MUSD 380.

� 100% financed by shareholders.

� Originally sponsored by GDF Suez. Currently owned by E-CL60%, and Antofagasta Railway Co. plc 40%.

Investment Program:Environmental CAPEX

� New Regulations for Particulate Matter and Gas Emissions ofThermoelectric Power Plants.

• E-CL has MUSD 166.2 (3-year Environmental Capex plan).

� Law Nr. 20,257 on Non-Conventional Renewable Energy(“ERNC” Law).

• 5% (+1% p.a. until reaching 10% in 2024) of

26

•contracted energy must be generated with

non-conventional renewable sources.

• Requirement may be met through own generation

with ERNC; purchase of ERNC-Certificates

(similar to carbon bonds); or payment of penalties.

• E-CL is developing wind farm and solar

projects, and is studying microalgae developments.

• E-CL will buy “ERNC Certificates” from the

GDF-Suez affiliate, Monte Redondo (wind farm in the SIC).

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27



Financial Summary: E-CL’s Results Evolution

E-CLConsolidated

Income Statement: MUSD 2005 2006 2007 2008 2008 2009

Revenues 119 127 272 577 1210 977Operational Cost -121 -138 -199 -411 -1012 -715

Operational Result -1 -10 73 166 198 262Non Operational Result 4 -2 -1 -12 -40 58

Tax -1 2 -11 -26 -29 -57

28

Notes:

1.EBITDA: Operational result + depreciation/amortiz ation.

2.Result (2005-2009): under Chilean GAAP.

3.2008 E-CL consolidated is only for comparative p urposes.

Minority Interest 0 0 0 0 1 -3

Net Income 2 -11 61 129 130 259

EBITDA 25 17 100 197 273 341

EBITDA/Revenues 21% 13% 37% 34% 23% 35%EBITDA/Financial Expenses 3,4 1,8 9,0 17,8 24,6 23,2

40%

50%

60%

70%

Colbún

Endesa

Gener

E-CL

Financial Summary: Peer Comparison

�EBITDA/Revenues: 2009

29

10%

20%

30%

Colbún

� The Chilean electricity industry framework allows for long-term investments ensuring return on capacity investments.

� E-CL exhibits solid financials, good cash flow generation and prudent financial management.

SICSIC-SING SING

Source: Companies’ Annual reports

Financial Summary: E-CL Balance Sheet

E-CLConsolidated

Balance Sheet: MUSD 2005 2006 2007 2008 2008 2009 % 09

Cash 30 25 90 62 94 167 7%Current Assets 29 44 67 103 294 360 15%

Fixed Assets 514 497 487 464 1.435 1.790 76%Other Assets 65 64 57 54 45 35 1%

Total Assets 638 630 701 683 1.868 2.352 100%Current Liabilities 15 20 28 49 564 144 6%Debt Senior 204 203 201 120 167 209 9%Related Companies Debt (net) 46 46 41 37 37 488 21%

30

Note. Balance 2005-2009: under Chilean GAAP. Profor ma combined 2008 highlights provided for comparativ e purposes.

Other Liabilities 5 5 13 15 54 76 3%Total 50 51 54 52 90 564 24%

Shareholders Equity 368 356 417 462 1.048 1.328 56%Minority Interest 1 1 1 1 -1 107 5%Total Shareholders Equity + Debt 638 630 701 683 1.868 2. 352 100%

Net Debt /EBITDA 8,87 13,52 1,53 0,48 0,40 1,55Net Debt/Equity 60% 63% 37% 20% 11% 40%ROE (EBITDA/Equity) 7% 5% 26% 45% 37% 39%CAPEX: MUSD 7 6 5 2 177 455

Financial Summary:A Financial Policy that Supports our Business Strategy

� Commitment to sustained creditworthiness• Low debt (target net debt-to-EBITDA below 2.5x).• Dividend pay-out ratio of 50%, except in case of greater

CAPEX when minimum regulatory 30% will apply.

� To persuade customers to enter into L.T. contracts with financially reliable counterparty.

� Financial flexibility• Conservative maturity profile. • Access to different sources of financing.

� To take advantage of future investment opportunities

(potential Capex of

31

(potential Capex of MUSD 1,000 during next 3 years).

� Access to liquidity• Cash on hand of at least MUSD 50 at all times

(currently MUSD 200).• Non-committed credit lines (currently MUSD 120)• Financial support from shareholders.

� To withstand potential shocks or fluctuations in business activity and prices.

� To reinforce financial flexibility.

2005 2006 2007 2008 2009 Total

Financial Summary: Dividends and Market Cap

27

65

80 172,152

1

Div

iden

ds

MU

SD

30%Payout ratio: 44% 50% 31%

32

0,325 0,313

0,6630,349

1,889 1,965

0,0

0,5

1,0

1,5

2,0

2,5

2005 2006 2007 2008 2009 May 17,2010

Mar

ket C

ap

MU

SD

(1)

(1) Source: IPSA

30%Payout ratio: 44% 50% 31%

Financial Summary: Debt Breakdown

51

157

489

Banks

Project Finance

Shareholders

Total Gross Debt

MUSD 697

673697 697

580530

495

400

500

600

700

800

MU

SD

Debt by typeGross & Net Debt Evolution

33

� As of March 2010: MUSD 202 of cash and cash equivalents on consolidated basis.

� E-CL enjoys strong financial support from shareholders.

� Plan to refinance shareholder loans by the end of 2010.

3002008 2009 1Q 2010

Gross Debt Net Debt

Figures as of 1Q2010

Conclusions

� Low volatility in cash flow: PPAs with fuel costs pass-through clauses.

� High potential growth: good market position to supply new demand from the strong copper mining industry.

� Company with healthy financial ratios.

� Support from GDF SUEZ: best practices, new technologies, know-how, financial.

� Company with diversified mix of fuel sources for generation (flexibility).

� Environmental impact mitigation: capex for emissions reduction.

� Projects of renewable energy under development.

34

energy under development.

Prepared for challenging opportunities

End of the Presentation

Thank You

Annexes

Ownership Structure:E-CL Group Corporate Structure

Central Termoeléctrica

Andina CTA 100%

Electroandina –Distrinor 100%

Operational AssetsEC-L Alone

693 MW

Gross Capacity

49% Coal

38% Hydro-Gas&LNG

13% Fuel&Diesel

1,059 Km transmission lines

Gasoducto Chile & Argentina 100%

Inversiones Hornitos 100%

E-CLE-CL

37

Andina CTA 100%

165 MW

Gross Capacity

100% Coal

1,103 MW

Gross Capacity

40% Coal

40% Gas&LNG

20% Fuel&Diesel

1,047 Km transmission line

556 Mil m3/day capacity Gas Distributor

8,0 Millions m3/day capacity

1,045 Km pipeline

165 MW

Gross Capacity

100% Coal

� 30% of the SING installed capacity.

� LT PPAs with Mining Cos.

� Gas distribution sub. (Distrinor).

EBITDA: MUSD 170 (yr-2009)

� Contracted capacity 4.26MM m3/day.

� Take-or-pay GTAs w E-CL & EA until 2019.

EBITDA: MUSD 42 (yr-2009)

� Greenfield projects in Mejillones (92.8% & 87.2% completion, respectively, in April-2010).

� CTA: 100% owned by ECL: 21-yr PPA with Codelco.

� Hornitos: 60% owned by ECL; 40%-owned by Antofagasta Railways (a sub. of Antofagasta plc): 1 5-yr. PPA with Minera Esperanza.

� 144-km. transmission line and substation expansion for power evacuation of new plants built & operated by E-CL.

Projects under Study to the SING

Microalgae (ERNC)Environmental approval

Solar (ERNC)Environmental approval

Wind Farm (ERNC)Environmental approval

38

Environmental approvalprocess

ERNC: Non-Conventional Renewable Energy(Energía Renovable No Convencional)



Coal (750 MW)Environmentally approved

Financial Summary: EBITDA by Companies

E-CL Consolidated FY09 1Q10

Revenues 977 235Operational Cost -715 -188

Operational Result 262 47Non Operational Result 58 11

Tax -57 -11Minoritary Interest -3 1

Net Income 259 48

EBITDA 341 71

EBITDA/Revenues 35% 30%Psysical Sales (TWh) 7,1 1,7

Electroandina FY09 1Q10



Tax -25 -4Minoritary Interest 0 0

Net Income 124 19

EBITDA 170 23

EBITDA/Revenues 27% 16%

MUSDMUSD

39

Psysical Sales (TWh) 7,1 1,7Psysical Sales (TWh) 4,2 1,0

GNA's Chile/Argentina FY09 1Q10



Tax -8 -2Minoritary Interest 0 0

Net Income 21 7

EBITDA 42 14

EBITDA/Revenues 64% 69%

Gen. mix 2009 vs. 1Q10

0,0

2,0

4,0

6,0

2009

Hydro

Coal

GAS

Fuel/Diesel

7.3 TWh

0,0

0,5

0,9

1,4

1,8

1Q10

Hydro

Coal

GAS

Fuel/Diesel

1.8 TWh

MUSD

Documents

Celfin Investors Day - Engie · E-CL Overview: Our Business (cont.) Recently renewed /renegotiated PPAs with pass-through provisions Contracted capacity of 1,171 MW increasing to